Bank of England Governor Mark Carney said on Tuesday 23 February the central bank was not making judgements about the outcome of Britains referendum on European Union membership, but noted moves in sterling since the date of the vote was set.
Our approach to forecasting events around the referendum is to take developments in markets and confidence indicator, survey indicators as given and to feed those through into the forecast, Carney said. We are treating this vote exactly how we would treat any other political vote which is not to make a judgement on the outcome and assume status quo continues. Obviously we take into account the movements in asset prices such as sterling as we have seen, he added.
Carney said the BoE was making contingency plans around the referendum on 23 June, and that the recent moves in sterling had been influenced by the upcoming vote. I will note though that there have been movements in sterling since it has become increasingly clear, the timing of the referendum.
He said hedging from investors against future falls in sterling around the referendum date had spiked to levels seen around the Scottish independence referendum, adding the hedging was focused on the sterling-dollar rate.
In terms of our forecast I just want to re-emphasise that we will take the exchange rate as given, and the uncertainty in other factors, if I may finish with this...those other factors in terms of how they affect real activity, he said.
The bosses at more than a third of Britains biggest companies have said leaving the European Union would put the economy at risk, backing Prime Minister David Camerons call for Britain to vote to stay, in the referendum. The pound posted its biggest one-day loss in almost six years on 22 February, on concerns Britain could vote to leave the 28-member bloc, prompting the business leaders to join forces to argue for the economic merits of EU membership.
